Question
The following monthly data in contribution format are available for the MN Co. and its only product: Total Per Unit Sales. $83,700 $279 Variable expenses.
The following monthly data in contribution format are available for the MN Co. and its only product: Total Per Unit Sales. $83,700 $279 Variable expenses. 32,700 109 Contribution margin 51,000 $170 Fixed expenses. 40,000 Net operating income. $11,000 The Company is currently using 70% of its available capacity. selling 300 units of product per month.
d. An order has been received from an overseas customer for 125 units to be delivered this month at a special discounted price of $95. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. If the offer is accepted, only 20% of variables expenses will be avoided. By how much would this special-order increase (decrease) the company's net operating income for the month?
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